An investigation into the rigging of Libor has been set by the British Parliament as the City of London worries that its reputation as the world’s top financial center has been damaged beyond repair.
Reuters reported Friday that after an acrimonious debate, Parliament voted Thursday to allow a parliamentary, rather than judicial, inquiry. The Labour Party had called for the latter, saying that the public would not view a parliamentary inquiry as having the same impartiality that a judicial review would provide.
Finance Minister George Osborne had accused Labour shadow minister Ed Balls of having “questions to answer” over his time as adviser to the former Labour chancellor. In an interview with political magazine The Spectator, Osborne had not only questioned Ball’s history but also said that individuals working under the previous Labour government were “clearly involved” in the rigging scandal.
An irate Ball challenged Osborne in Parliament, demanding that he provide evidence of his allegations or retract them and apologize. He also called the decision to allow politicians to investigate the Libor case “a very grave error of judgment” by Osborne and Prime Minister David Cameron, according to a Bloomberg report.
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“We need the inquiry to be thorough and genuinely cathartic or else we will be here again,” Ball was quoted saying. However, in the end Labour voted to support the inquiry.
The Libor scandal, termed “bad for Britain” by Treasury Committee head Andrew Tyrie, who will lead the investigation, is taking a toll on London, which lately has been the site of numerous financial scandals. The deals that led to the troubles at Lehman Brothers, Bear Stearns and AIG were booked in London, as was the recent staggering loss by the “London Whale” at JPMorgan Chase. So were the unauthorized trades that resulted in a $2.3 billion loss at UBS AG.
“My heart sinks every time there is a scandal and the perpetrators are in London, even if it is not always the U.K.’s responsibility, it is under our noses,” Sharon Bowles said in the report. Bowles, who is chairwoman of the European Parliament’s economic and monetary affairs committee, added. “There is an effect on the U.K.’s reputation, and it reinforces the view that even after all the apologies there is much to do.”